Self-employment tax calculator
A sole proprietor pays both halves of Social Security and Medicare, which is why the self-employment tax often exceeds the income tax. This calculator applies the 92.35% base, the 2025 wage cap, the Medicare surcharge and the half-SE deduction that reduces taxable income.
| Component | Base | Rate | Tax |
|---|---|---|---|
| Social Security | $110,820 | 12.4% | $13,742 |
| Medicare | $110,820 | 2.9% | $3,214 |
| Additional Medicare | $0.00 | 0.9% | $0.00 |
| Total SE tax | — | — | $16,955 |
| Income tax | $111,522 | brackets | $19,612 |
The Social Security portion stops at the $176,100 wage base; Medicare continues without limit.
0.9235 × net profit · The 7.65% employer share is excluded from the base.
12.4% × min(base, 176,100) · Capped at the annual wage base.
2.9% × base · No cap; 0.9% extra above the threshold.
SE tax / 2 · Deducted from gross income, not a credit.
A clear path from inputs to results.
A sole proprietor pays both halves of Social Security and Medicare, which is why the self-employment tax often exceeds the income tax. This calculator applies the 92.35% base, the 2025 wage cap, the Medicare surcharge and the half-SE deduction that reduces taxable income.
How to use
- Enter net self-employment profit after expenses.
- Add any W-2 wages also subject to Social Security.
- Choose the filing status.
- Read the SE tax, the deduction and the total federal bill.
The formula
Reference: IRC §1401 (SECA), 2025 Social Security wage base $176,100, IRS Schedule SE.
Worked example
$120,000 of net self-employment profit, single
- Net profit $120,000.
- No W-2 wages.
- Single filer, standard deduction.
- 1
SE base: 120,000 × 0.9235 = $110,820.
- 2
Social Security: 12.4% × 110,820 = $13,741.68.
- 3
Medicare: 2.9% × 110,820 = $3,213.78.
- 4
SE tax: $16,955.46; deductible half $8,477.73.
- 5
Taxable income: 120,000 − 8,477.73 = $111,522.27; income tax $19,612.34.
- 6
Total federal: $36,567.80, an effective 30.5% of profit.
SE tax $16,955 · income tax $19,612 · total $36,568 (30.5%).
Interpreting the result
The SE tax is not optional and not reduced by the standard deduction — it is calculated on profit first. The half-SE deduction softens the income tax, but the 15.3% still lands on the first dollar. That is why retirement contributions, health insurance and an S-corporation election are such common conversations for profitable sole traders.
Assumptions & limitations
- Federal only, tax year 2025.
- Net profit is after business expenses but before retirement contributions.
- No credits, estimated-payment penalties or state tax.
Frequently asked questions
Why 92.35% and not the full profit?
The base excludes the employer half of the tax, so you are not taxed on the portion that represents the employer contribution.
Does an S-corp help?
It can, because only reasonable salary is subject to payroll tax. It adds payroll, filing and compliance costs, so it is a decision for a professional.
Does the Social Security part ever stop?
Yes, above the annual wage base. Medicare continues with no cap.
Methodology last reviewed 2026-10-21. Results are informational and not financial or engineering advice — see our disclaimer.